What works best for new cars: MSRP or Internet Price?
- Thread starter Steve Sams
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- May 1, 2006
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Quote of the day (yesterday)!
I LOVE the idea of pricing new cars. I actually got our entire group (Checkered Flag) to go along with it during Cash for Clunkers and one location (Hyundai/VW) that took it further told me every customer in their showroom came off the pricing on our website. We were the first in the market to sell out during that time period.
Because of the fear of a price war I was unsuccessful at getting this practice to be a regular occurrence, and I seriously regret that.
I have been wanting to write this as a blog article, but I'll say a small part of it here. Consumers are now conditioned to use Google to search for not only a place to buy something, but as a place to find the best deal. Dealership websites do not play to what has become the "Internet shopping norm," when it comes to new vehicles. Sure, you can argue with me about specials and incentives, but I'll say back: you need a PHD in car sales to understand the disclaimers. I will argue that specials and incentives (with tons of disclaimers) are actually turn-offs. So consumers are left with the ability to only complete one mission online: "do you have this car in stock?" And then they want to know what the price is. If those two things are not being asked in 80%+ of the leads and phone calls you're receiving, you're either in a crap-credit area or you're lying.
Who has the balls to discount their new cars on their website? And I don't mean a few hundred dollars off; I mean price them based on the average of what you actually sell them for (maybe slightly more than that).
The beautiful part about selling a bunch of new cars vs. the hard part about selling a lot of used cars: sourcing is much much easier. If you're high-volume your manufacturer will find you cars.
Quote of the day (yesterday)!
I LOVE the idea of pricing new cars. I actually got our entire group (Checkered Flag) to go along with it during Cash for Clunkers and one location (Hyundai/VW) that took it further told me every customer in their showroom came off the pricing on our website. We were the first in the market to sell out during that time period.
Because of the fear of a price war I was unsuccessful at getting this practice to be a regular occurrence, and I seriously regret that.
I have been wanting to write this as a blog article, but I'll say a small part of it here. Consumers are now conditioned to use Google to search for not only a place to buy something, but as a place to find the best deal. Dealership websites do not play to what has become the "Internet shopping norm," when it comes to new vehicles. Sure, you can argue with me about specials and incentives, but I'll say back: you need a PHD in car sales to understand the disclaimers. I will argue that specials and incentives (with tons of disclaimers) are actually turn-offs. So consumers are left with the ability to only complete one mission online: "do you have this car in stock?" And then they want to know what the price is. If those two things are not being asked in 80%+ of the leads and phone calls you're receiving, you're either in a crap-credit area or you're lying.
Who has the balls to discount their new cars on their website? And I don't mean a few hundred dollars off; I mean price them based on the average of what you actually sell them for (maybe slightly more than that).
The beautiful part about selling a bunch of new cars vs. the hard part about selling a lot of used cars: sourcing is much much easier. If you're high-volume your manufacturer will find you cars.
Alex, I worked at a store with very limited spaces to park used cars. Our sales averaged 150% of the spaces we had to park used cars. We always sold more new than used.
I didn't hear complaints about the disclaimers. Now, I often was asked if we had the car. I heard this even though our website said that me make every attempt to keep our inventory pure.
We sold 70% of the new and used cars and our average total gross beat the floor. It's all iron. We were in Dallas and pulling people from Houston, Tulsa, Oklahoma City, Shreveport and even a few from Lafayette.
The factory eagerly supported us.
- Dec 2, 2009
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Yago -- I have a bachelor's degree in English and I can't keep-up with all the sarcasm here. I honestly thought Jeff and ddavis were advocating for sale-price all new car inventory. Still not sure...
- Dec 2, 2009
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Quote of the day (yesterday)!
I LOVE the idea of pricing new cars. I actually got our entire group (Checkered Flag) to go along with it during Cash for Clunkers and one location (Hyundai/VW) that took it further told me every customer in their showroom came off the pricing on our website. We were the first in the market to sell out during that time period.
I don't understand this at all.
1st -- you discounted cars during Cash for Clunkers?? No wonder you were the 1st to sell out! Why??
But more importantly, and believe me, I'm not being a smartass -- what is it that you like about the idea of sale-pricing all of your new-car inventory?
You think you'll get more leads? More walk-in traffic? You think it streamlines the process on the floor? My answer to those three is No, No, and No. But like I said earlier, if there's a good argument to be had, I'm listening.
I agree that the incentives and disclaimers are turn-offs. And that's why customers want and need a "relationship," -- someone to take them by the hand and walk them through the process.
Although we don't actually say this anymore (old-school) -- "Price depends upon availability at the time of sale," it's still the truth. There is no "1 Price" until the entire industry goes the commodity route. I submit that the sale price you list on your New Car inventory is completely irrelevant, in that the vast majority of your clients are expecting to negotiate that number anyway. And if the dealership decides to go that route and stick with those prices, that dealership is missing opportunities for gross.
- May 1, 2006
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To answer your question, pricing cars at the price we were going to sell them for anyway, did a couple of things:
1. More walk-ins
2. Shortened Internet lead process due to confidence in pricing
3. Less negotiating...mainly because we told the sales people "no" - when the salesperson believes, the customer believes
So John, try it. I would ask you if you have the balls :p , but I know you really don't have the time to give it a shot. Pricing nets you more opportunity and it inspires confidence in your staff that the price is the price. The trick is really in pricing things in a manner a consumer will find it enticing.
Get it now
- Dec 2, 2009
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To answer your question, pricing cars at the price we were going to sell them for anyway, did a couple of things:
1. More walk-ins
2. Shortened Internet lead process due to confidence in pricing
3. Less negotiating...mainly because we told the sales people "no" - when the salesperson believes, the customer believes
So John, try it. I would ask you if you have the balls :p , but I know you really don't have the time to give it a shot. Pricing nets you more opportunity and it inspires confidence in your staff that the price is the price. The trick is really in pricing things in a manner a consumer will find it enticing.
Get it now
HA! Actually, we did it for YEARS with a couple of our brands -- including a volume brand (CJD), and it honestly did absolutely nothing. No more traffic -- web, phone, leads. Actually, seemingly less so. So in part, I'm speaking from experience. So nope, not at all -- not going to agree with you on this one, Boss.
Philosophically, I think I've my head wrapped around the reason why it made/makes no difference -- and why it does more harm than good in the long run. Also, I was around when Oldsmobile went to their one-price format and failed miserably, as Scion does now. But that's a long story about fear and instinct facilitated by the fact that the Monroney Label is what amounts to a "lie."
Maybe a blog article some time
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Oldsmobile and Scion build products for niche markets. Scion is one-price.....not discounted pricing. Two totally different things. Checkered Flag also went through a "one-price" period and it was a disaster in the mid-90s. The problem was in not recognizing the market fluctuations....and it was also pre-Internet.
Eventually, discounted new car pricing displayed online (which is all I'm talking about) will happen. It is a matter of time before a vAuto-like tool for new cars is launched and this becomes much more obvious. If you don't want to recognize this, then there is still a decent amount of the "old school" gene left in you
Eventually, discounted new car pricing displayed online (which is all I'm talking about) will happen. It is a matter of time before a vAuto-like tool for new cars is launched and this becomes much more obvious. If you don't want to recognize this, then there is still a decent amount of the "old school" gene left in you
- Dec 2, 2009
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Oldsmobile and Scion build products for niche markets. Scion is one-price.....not discounted pricing. Two totally different things. Checkered Flag also went through a "one-price" period and it was a disaster in the mid-90s. The problem was in not recognizing the market fluctuations....and it was also pre-Internet.
Eventually, discounted new car pricing displayed online (which is all I'm talking about) will happen. It is a matter of time before a vAuto-like tool for new cars is launched and this becomes much more obvious. If you don't want to recognize this, then there is still a decent amount of the "old school" gene left in you
Ahhh.... my very bright young Master... you fail to see the correlation! But I do admit that there are quite a few "old school" jeans left in me... and even more old jeans left in my closet... next to the jorts
What I'm intoning -- and I don't think you want to get into this on this string -- is the root cause of why the one-price schemes fail as well as the reason why discounted new car pricing fails is the same.
This will not happen successfully because it simply won't work. But don't despair.Alex Snyder;18389 [B said:
What will happen? What is actually tied DIRECTLY to the "revolution" of which you speak in the Socialization of Marketing? Really, really think about the ramifications of "Pull" and Consumer Satisfaction and the notion of "Control."
Perhaps as soon as before we retire, automotive New Car will go "one price" across the board.
It's the simple realization that Dealers cannot facilitate the Culture Shift that consumers are demanding. But Manufacturers can
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To answer your question, pricing cars at the price we were going to sell them for anyway, did a couple of things:
1. More walk-ins
2. Shortened Internet lead process due to confidence in pricing
3. Less negotiating...mainly because we told the sales people "no" - when the salesperson believes, the customer believes
So John, try it. I would ask you if you have the balls :p , but I know you really don't have the time to give it a shot. Pricing nets you more opportunity and it inspires confidence in your staff that the price is the price. The trick is really in pricing things in a manner a consumer will find it enticing.
Get it now
Alex, let me add to your list:
4. Increase lead count
5. Increase in closing ratio
6. Improved ROI
The market determines the price and the market, for cars, is the Internet. Dealers have their heads in the sand if they think this is going to change. Even if there were no third party sites, you still have dealers sending out net.net quotes. Market value isn't a mystery to the customer.
John, I've been doing this for six years. This isn't a fad; it's the reality. I wasn't in a Toyota store or even Honda but I outsold every dealer in a very large group which included a top 10 (in the nation) Toyota store. Our average total gross BEAT THE FLOOR.
As I said earlier in this thread, there is a large group that is posting record profits with the same game plan.
